Page:United States Statutes at Large Volume 48 Part 1.djvu/717

73d C ONGRESS. SESS . II. CH. 277 . MAY 10, 1934 . tion allowed by this subsection shall not be allowed in respect of dividends received from a corporation organized under the China Trade Act, 1922, or from a corporation which under section 251 is taxable only on its gross income from sources within the United States by reason of its receiving a large percentage of its gross income from s ources withi n a po ssessi on of t he Uni ted St ates . (q) PENsION TRUSTS .-An employer establishing or maintaining a pension trust to provide for the payment of reasonable pensions to his employees (if such trust is exempt from tax under section 165, rela ting to t rusts cre ated for the exclu sive bene fit of em ployees) shall be allowed as a deduction (in addition to the contributions to such trust durin g the taxabl e year to cov er the pensi on lia bility accruing during the year, allowed as a deduction under subsection (a) of this section) a reasonable amount transferred or paid into such trust during the taxable year in excess of such contributions, but only if such amount (1) has not theretofore been allowable as a deduction, and (2) is apportioned in equal parts over a period of ten consecutive years beginning with the year in which the transfer or payment is made . A ny dedu cti on all owa ble und er section 23 (q) of the Revenue Act of 1928 or the Revenue Act of 1932 which under such section was apportioned to any taxable year beginning after December 31, 1933, shall be allowed as a deduction in the years to which so apportioned to the extent allowable under such section if it had remained in force with respect to such year . SEC . 24. ITEMS NOT DEDUCTIBLE . (a) GENERAL RULE .-In computing net income no deduction shall in an case be allowed in respect of- (y1) Per sonal, livin g, or family expen ses ; (2) Any amount paid out for new buildings or for permanent improvements or betterments made to increase the value of any property or estate ; (3) An y amount expended in restoring property or in making good the exhaustion thereof for which an allowance is or has been made ; (4) Premiums paid on any life insurance policy covering the life of any officer or employee, or of any person financially inter- ested in any trade or business carried on by the taxpayer, when the taxpayer is directly or indirectly a beneficiary under such policy ; (5) Any amount otherwise allowable as a deduction which is alloca ble to one o r more class es of income other than i nteres t (whether or not any amount of income of that class or classes is received or accrued) wholly exempt from the taxes imposed by this title ; or (6) Loss from sales or exchanges of property, directly or indirectly, (A) between members of a, family, or (B) except in the case of distributions in liquidation, between an individual and a corporation in which such individual owns, directly or indirectly, more than 50 per centum in value of the outstanding stock . For the purpose of this paragraph-(C) an individual shall be con- side red as ownin g the stock owned, direct ly or indire ctly, by his family ; and (D) the family of an individual shall include only his brot hers and siste rs ( wheth er by the whol e or half bloo d), spouse, ancestors, and lineal descendants . (b) HOLDERS OF LIE OR TERMINABLE INTEREST,-Amounts paid under the laws of any State, Territory, District of Columbia, pos- session of the United States, or foreign coun try as income to the bolder of a life or terminable interest acquired by gift, bequest, or Post, p . 729. 691 INCOME TAX. COMPUTATION OF NET INCOME- Contd . China Trade Act corporation. Vol 42, p.849 Post, p. 738 . Maintenance of pen- sion trusts . Allowance under pre- vious laws . Vol. 45, p 802; Vol 47,1, .182 . Items not deductible. Personal, etc, ex- pe nses . P ropert y imp rove- ments . Re storin g prop erty . Life insurance pre . miums for employees . Deductions allocable to tax-exempt incomes . Property losses from sales, etc . Exchanges between me mbers of fam ily . Shareholder and cor- poration . Definitions . Holders of life or terminable interest . Deductions on in- come acquired by gift, etc.